Lloyds finance chief axed in 'divi row'

LLOYDS TSB abruptly sacked its finance director Philip Hampton today amid City speculation that he clashed with chief executive Eric Daniels over the need to cut the dividend.

In a cool statement that clearly suggested a row, the bank said: 'He will leave immediately and will be compensated in line with his contractual entitlement.'

That will mean a pay-off of up to £483,000 plus his yet-to-be-decided 2003 bonus.

Lloyds shares fell 5 1/2p to 455 1/4p as the bank was left with no proper numbers chief. A search has begun, and Lloyds said that deputy chief executive Mike Fairey will take on the role temporarily.

Hampton was a well-known figure in the City who masterminded demergers at British Gas and then British Telecom. He had been at Lloyds for just 20 months.

Analysts said Hampton had always appeared less comfortable with the dividend than his boardroom colleagues. One view is that Lloyds, which yields a thumping 7.5%, is living beyond its means and needs to cut it.

Jon Kirk of Fox-Pitt Kelton said: 'Hampton was always seen as sceptical about the level of the dividend. He was seen as uncomfortable with it. There was probably a rift between him and the chairman [Maarten van den Bergh] and chief executive.' Hampton's departure made a dividend cut less likely, he added.

Lloyds gave a less sinister explanation for the departure, explaining that the bank had shifted strategic focus away from Hampton's-area of expertise of mergers and restructurings.

Daniels said: 'I am grateful to Philip for the contribution he has made to Lloyds TSB, particularly in helping me to reduce volatility and put in place a firm platform for growth.'

Asked whether Hampton had been sacked, a Lloyds spokeswoman said: 'His contract has been terminated.'

Lloyds last month reported a 'satisfactory trading performance' in 2003 but, to the frustration of some shareholders, remained silent on its plans for the dividend and a possible share buyback.

There was no comment from Hampton, 50, in the statement. He had been tipped as a possible candidate for the chief executive post before Daniels was appointed last year to replace Peter Ellwood.

Hampton was praised for his role in breaking up British Gas into BG Group and Centrica in the 1990s and for the record-breaking £5.9bn demerger of mobiles group mmO2 from British Telecom.

Daniels reiterated his confidence over the bank's prospects. 'As I indicated in the December trading statement, we are now in a better position to deliver improved performance in 2004 and beyond,' he said.